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Japanese Condo Developer Unfazed by Concerns of Oversupply

May Kunmakara / Khmer Times Share:
Vehicles pass the Tokyo INN in Chamkar Mon district yesterday. KT/ Chor Sokunthea

Despite warnings that an oversupply of luxury condominiums is imminent due to the number of new projects being built, a leading Japanese investor in the property sector in Cambodia says the market remains very attractive because two decades of strong economic growth are fuelling demand for better housing. 
 
Tani Shunji, CEO of Tanichu Assetment, recently brought Japanese-style condominiums to Cambodia with two projects in Boeung Keng Kang district, and recently broke ground for another called J-Tower. The 22-floor project located in Tonle Bassac commune of Khan Chamkarmon district will cost $10 million to build. 
 
“I am not worried about competition with other condo projects because I have confidence in our good locations, good quality and reasonable prices,” Mr. Tani said.  
 
He said all 107 units of J-Tower sold out at prices between $60,000 to more than $80,000 per unit in just a few weeks. About 60 percent of the buyers are Japanese, 30 percent are Cambodian and 10 percent are from other foreign countries, Mr. Shunji added. 
 
Minister of Land Management, Urban Planning and Construction Em Chhun Lem has described last year as “the year of condominium and apartment development,” and said investment was flowing into construction from both domestic and international sources. 
 
The construction boom is the result of a combination of factors, including political stability, social security, and annual growth of about 7 percent, he said. 
 
Investment in the construction sector reached an all-time high last year of almost $3.5 billion, up about 40 percent from the $2.5 billion invested in the sector in 2014, according to data from the Ministry of Land Management, Urban Planning, and Construction. 
 
According to the data from Council for Development of Cambodia, cumulative investment from Japan reached more than $400 million as of June last year.  
 
More Japanese investors are turning their focus the emerging property sector, pouring tens of millions of dollars into construction of apartments and condominiums in the capital Phnom Penh, realtors say. 
 
Kim Heang, president of the Cambodian Valuers and Estate Agents and CEO of Khmer Real Estate, said Beung Keng Kang and Tonle Bassac districts are drawing investment from both foreign and domestic developers.
 
“Construction is booming now and it has been doing good as we still see a big flow of investments from Taiwan, Singapore and Japan last year,” Mr. Kim Heang said. In August last year, Japan’s Creed Group announced it was investing hundreds of millions of dollars in three housing developments in Phnom Penh.  The first project, a condominium complex near the airport, will cost $134 million. 
 
The three developments will add a combined 2,309 units to the property market. The condos will target international investors and Japanese residents of Phnom Penh. The other two projects will be gated communities for the Cambodian buyers. 
 
“Cambodia has always been of utmost concern to Creed Group because of its promising growth potential driven by a young population, investor-friendly government policies and the solid demand for Japanese quality,” the company said in a statement. 
 
Jun Takeguchi, director of realtor AnnaCam Partners, told Khmer Times previously that Cambodia’s liberal investment law was one reason why development has been so fast over the last five years. Cambodia has drawn billions of dollars in foreign direct investment, mainly into the real-estate sector, he said. 
 
“As the economy matures, extended families will start to live separately. This will create more demand for new houses, condos and apartments,” he said.
 
Mr. Heang said recently that the condo market has been relying on foreign buyers rather than local ones. 
 
“Now, we see more than 70 percent of condo sales are to foreigners, while purchases by locals are still very small. But, I think in the next 10 years, the market will be dominated by locals as their earnings will be higher,” he added.
 
According to a latest report from the ministry there were 2,500 construction projects, covering 7.7 million square meters of land last year. About 700 buildings, ranging from five to 55 floors, were built last year across the country, with most going up in the capital, Kandal, Siem Reap, Sihanoukville, and Battambang provinces.
 

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